Anthem (ANTM) Acquires Cigna (CIG)

After almost a year of contentious negotiations Anthem Inc. (ANTM) agreed on Friday to acquire Cigna Corp (CI) in a deal valued at $54.2 billion, creating the largest U.S. health insurer by membership.

The agreement comes three weeks after Aetna agreed to buy Humana Inc (HUM), the smallest of the big five insurers, for $37 billion in cash and stock.

Anthem will pay $103.40 in cash and 0.5152 of its shares for every Cigna share held, it said in a statement. That’s a 22% premium to Cigna’s closing price of $154.36 on Thursday.

The acquisition, the biggest ever in the health insurance industry, is valued at $183.36 per share based on Anthem’s Thursday close of $155.21.

“We believe that this transaction will allow us to enhance our competitive position and be better positioned to apply the insights and access of a broad network and dedicated local presence to the health care challenges of the increasingly diverse markets, membership, and communities we serve,” Joseph R. Swedish, the Anthem chief executive, said in a press release.

The combined company will be led by Swedish. Cigna Chief Executive David Cordani will be president and chief operating officer.

Anthem said the combination will increase adjusted EPS by almost 10% in the first year, with the accretion more than doubling by year two following the closing of the transaction. The enterprise value of the transaction is $54.2 billion.